Universal Wants Spotify to Restrict Free Streaming

Universal is allegedly looking to put a few more limits on Spotify's free streaming service via its current licensing negotations with the company.

Stop us if you've heard this one: Universal Music Group isn't a big fan of Spotify. Rather, Universal isn't a big fan of anyone getting anything on Spotify for free. We've previously covered Universal executives' comments that an ad-funded model for streaming services just isn't going to be enough going forward; that's nothing new, and nothing new for rival record companies either. What is new, however, is how Universal might be tightening the screw on Spotify through the two companies' ongoing licensing negotiations.

According to the Financial Times, sources at Universal have indicated that the prevalence of free music on streaming services has hurt paid-for downloads on other services like Apple's iTunesregardless of whatever restrictions these services put in place for their free-listening users. That, in turn, has affected Universal's bottom line.

(Spotify, as you might expect, disagrees; company executives maintain that the services helps shine a spotlight on artists that might otherwise have little chance at making much money via traditional downloads.)

Though Universal doesn't want Spotify to abandon its free service entirelywhich Spotify executives are balking at doingthe company is allegedly suggesting that Spotify try putting various limits on free streaming. In one setup, Spotify might limit the number of songs that can be listened to even on an ad-supported version of its service. That, or perhaps Spotify's limits would be based around the total time users could stream free music each month, not by the number of songs they could listen to.

Regardless, Universal is clearly interested in converting as many free streaming users over to paid streaming subscribers. To Spotify executives, the two services must exist simultaneously: an all-paid service wouldn't be possible, as it would need a companion free service to succeed.

That said, Spotify appears to be doing one of the best jobs among its rivals as far as conversions go. As the Financial Times notes, Pandora has just around 3.5 million paid subscribers or so (versus around 80 million free users). YouTube, an even worse example, has around 1 billion users each monthand a very, very small number who pay for a service like YouTube Music Key (which is admittedly still in a preview, rather than a full-fledged release). Spotify, as its own website indicates, has more than 60 million active users and more than 15 million paying subscribers.

David Murphy got his first real taste of technology journalism when he arrived at PC Magazine as an intern in 2005. A three-month gig turned to six months, six months turned to occasional freelance assignments, and he has since rejoined his tech-loving, mostly New York-based friends as one of PCMag.com's news contributors.
His rise to (self-described) fame in the world of tech journalism began during his stint as an associate editor at Maximum PC, where his love of cardboard-based PC construction and meetings put him in...
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